A few months back, I needed help hiring a few great freelancers. So I naturally posted on LinkedIn asking for recommendations.

Within 24 hours, my inbox got flooded with messages from all sorts of agencies. I had such a hard time going through all messages that I needed to pull in one of my colleagues to help.

At first glance, that sounds like a great success. I needed help and got plenty of options. But when I started looking deeper, 95 per cent of all messages came from mediocre agencies. Their websites were terrible. I could not find any social proof, and the people reaching out to me were way too pushy. Rather than trying to understand my needs, they tried to force their way in.

So I copied the same message and shared it in a few paid communities where I am a member. Organisations such as OnDeck, Reforge, and DemandCurve. A few days later, I met a great copywriter who is currently working with us. The volume of requests was lower, but the quality was substantially higher.

Also Read: Demystifying NFTs and DeFi

That prompted me to write the following:

That was not the first time when I tried to source great talent or insights via platforms such as LinkedIn, Quora, and Facebook –and got disappointed. Please note that I am pretty active on LinkedIn with about 5,500 followers, many of them highly curated connections.

Despite that, over time, I have decreased my outreaches via LinkedIn and doubled down on paid communities. Communities where the members are fewer but better curated. That has helped me spend less time on unqualified prospects and more time-solving hard problems.

The more I reflect on that experience, the more I start seeing value in two upcoming verticals:

• Paid communities
• NFTs

Paid communities and a brief history of the internet

Web1

In Web1, we discovered the internet through dial-up modems, which helped us access static web pages. By today’s standards, web1 was a laughable experience. I still remember how an average movie took three days to download during my childhood. The internet was slow, expensive, and had a terrible user experience.

Yet, the fact that we could share information so easily with the entire world had an incredible impact on our progress. Before the internet, we relied on printed books. We could spread information only at the speed of physical distribution. Access to information was slow, gated, and not even possible in some parts of the world.

Also Read: Meet the 22 Web3 investors that are ready to rock the future with your startup

Platforms such as Craiglist got a lot of traction because they served as digital yellow pages. Yes, indeed, the experience of browsing such venues was not extraordinary. But users could easily access organised directories of relevant information like never before in human history.

Web2

Throughout the past 10 to 20 years, we have seen the rise of the second wave of the internet, the so-called Web2. Three core innovations enabled Web2:

• Mobile
• Social
• Cloud

All those innovations unleashed many attempts to unbundle well-established, horizontal marketplaces. The classic example here is the unbundling of Craiglist:

It is important to note that the image above points out only the success cases. Many startups attempted similar approaches but failed. Some disruptors lacked the necessary frequency of usage. Other, adequate business models to build sustainable businesses.

Yet, the startups that survived have often turned out to be more powerful than the entire horizontal platform as a whole. In other words, niche products can have a substantially better user experience. That allows them to capture a massive market share from both digital and analogue players.

“The moral of the story is this: In all but a few circumstances, the broad horizontal verticals eventually break. They become a victim of their own success. As the platforms grow, their submarkets grow too; their product gets pulled in a million different directions. Users get annoyed with an experience and business that caters to the lowest common denominator.

“And suddenly, what was previously too small a market to care about is a very interesting place for a standalone newco. Like clockwork, a new wave of innovation begins to swell, picking off the compelling verticals the new horizontal players cannot satisfy,” says Jeff Jordan and D’Arcy Coolican.

Also Read: 3moji aims to transform the way NFTs are used in metaverse with its composable avatars

On LinkedIn

Let’s go back to LinkedIn and how its value has been slowly depleting. As the platform grows and attempts to monetise more verticals, the experience for the average user degrades.

“The unbundling of Linkedin will create 20+ companies worth US$5 billion+. Heavily segmented, heavily verticalised, with highly specific functionality for each vertical. Let the unbundling of Linkedin begin,” says Harry Stebbings on Twitter.

LinkedIn is an excellent platform for some use cases. For example, think of recruiters and salespeople. But for more specialised verticals like blue-collar workers, engineers, or healthcare professionals, the platform fails to create the minimum necessary value.

To prove this point, consider the growing number of highly specialised startups: engineering (Hired), blue-collar (Wonolo), healthcare professionals (Docquity), hospitality (Pared), oil and gas (Workrise), bookkeeping (Paro), etc.

Each of those platforms builds digital experiences that are considerably better. Specialisation results in more personalisation and contextualisation for both candidates and employers than the generic LinkedIn model.

I do not mean to pick on LinkedIn alone, though. I think the same statement is true for Facebook, Instagram, YouTube, and other similar platforms. The market is big enough for everyone. I expect those platforms to continue to exist and deliver value to shareholders. After all, the winners of the Web2 era helped us to:

• Discover and connect with people and companies around the world
• Build digital profiles and a sense of credibility on the web
• Databases of opportunities around the globe
• Valuable content and permissionless ability to create

But it does feel like those winners have started to stagnate. At such a scale, it’s simply too difficult to cater to everyone’s needs. Therefore, there are opportunities to unbundle further and thus create niche communities. Platforms that would be smaller by design but will have 10x better experiences.

Also Read: How one LinkedIn message changed the fate of my failing startup

The intersection of communities and education: OnDeck

Now let’s take the opposite stance and study niche communities. In particular, I would like to review OnDeck.

Everyone who knows me well has heard of OnDeck. I am pretty impressed with what the company has achieved in such a short period. In turn, I have been actively promoting the company to my entire network.

At its core, you can think of OnDeck as an educational platform.

“On Deck is building a modern, digitally native education platform at a fraction of the time and cost of traditional higher and continuing education.” –  What’s On Deck for On Deck? by Packy McCormick

The image below illustrates some of the current educational programmes and thus communities that OnDeck runs. When I first heard of OnDeck, there were only two to three fellowships. Today, I counted 28 programmes ranging from no-code to chief of staff and all the way to longevity biotech.

One of the challenges with building communities is that they are tough to scale. If you are not careful, the community will become a generic network like LinkedIn. A platform that attempts to cater to everyone will inevitably degrade the average user experience.

Also Read: Understanding the traction metrics that investors are looking for in an early stage startup

In business, that’s called “evaporative cooling”. Evaporative cooling occurs when high-value community members leave a community because they are not getting sufficient value. In turn, that leads to a decrease in the quality of the overall community.

OnDeck is one of the few platforms that has managed to scale its efforts while retaining a fantastic community gradually.

Initially, the company started with a Founders Fellowship. A typical approach for them would have been to continue growing that programme. Instead, they decided to build a variety of small, intimate communities that are complementary to one another. Each new programme is small enough to retain great talent but complimentary enough to reinforce other fellowships. The resulting flywheel is illustrated by the tweet below.

Today, OnDeck has built a platform where like-minded people go to learn, connect, find jobs, and create. In the process, they have re-imagined a variety of LinkedIn features:

• User profiles
• Recruitment via the OD first 50 programme and its talent demo days
• Early career coaching
• Vertical specific communities like health, education, fintech, climate, etc.

All that while maintaining an exceptional NPS score.

How do NFTs drive community identity?

At first glance, NFTs look de-attached from the narrative that I am driving. But if you study success cases of NFT-driven community forming, you will quickly realise how that’s not the case.

Non-fungible tokens (NFTs) are unique. You can think of them as web3 media assets. The most popular use case of NFTs today are pieces of art, but it can be a lot more. Music, code, tweets, gifs, access passes, digital identities, domains, game character skins, and even this very essay that I am writing can be converted into an NFT through a platform like Mirror.

Organisations like CryptoPunks and Bored Ape Yacht Club (now the same company) have shown us how communities can be formed around characters. Hate it or love it, most people think of NFTs as a trading asset.

But let’s leave the revenue generation opportunities aside. Instead, let’s focus on better cultural representation and streamlined collaboration. People who own a crypto punk or a bored ape feel a sense of belonging. They are part of the same community of somehow similar people. Most probably, each person who owns such an NFT shares similar characteristics:

• Middle upper class or higher as otherwise, you won’t be able to purchase such an expensive NFT.
• Interest in the forefront of technology, i.e., web3.
• Similar taste in aesthetics, you won’t purchase a particular NFT if you find the design unattractive.
• Tech-savviness. Otherwise, you won’t be able to deal with the complexity of purchasing and storing an NFT securely.

The list goes on and on. Theoretically, you can create characters representing distinct cultures and ethnic or religious minorities. The more depth an NFT collection has, the higher the probability of bringing together a group of similar people.

Also Read: Are NFTs and celebrities a match made in heaven?

Today, all NFT-formed communities take place on a Discord server, but that won’t be the case tomorrow. So while everyone is racing to create the metaverse, we see the first attempts to bring NFT-centred community members together to the offline world.

Contrary to what most people believe, good web3 communities have a strong sense of cooperation, support, and recognition. It’s not entirely focused on trading and get-rich-quick schemes.

For example, as a birthday present, I received an NFT which gave me access to a well-managed discord community, Zen Academy. Members are helpful to each other, and my NFT serves as an accreditation of credibility. Unless you have that NFT, you cannot access the community.

But once you do, members seem to be quite like-minded and supportive of each other. The founding members put a lot of effort into ensuring everyone shares similar values.

Those thoughts have been going through my mind for quite a while. On the one hand, established tech platforms are more powerful than ever. But on the other, the user experience and perceived value have been eroding. Trying to satisfy users from all walks of life is challenging.

As a result, the product gets pulled in a million different directions. In turn, that dynamic attracts new startups like vultures. Entrepreneurs are especially good at sensing opportunities.

Over time we start seeing a lot of disruption. So founders pick niche verticals and build gated communities, vertical marketplaces, and NFT collections. Driving 10x better experience for a niche community of similar people in the process.

Having said that, I think that the network effects of big tech companies like LinkedIn, Facebook, Instagram, and YouTube make the products highly defensible, thus, difficult to disrupt.

So it will be challenging to reach a similar scale. But you do not have to. The market is large enough to accommodate smaller yet highly successful communities.

As the infamous saying goes: “There are only two ways to make money in business: One is to bundle; the other is to unbundle.”

You either aggregate or specialise.

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